Cork, Ireland – Janssen Sciences Ireland UC, a Johnson & Johnson (JNJ) company, announced today that it has decided to halt development of its hepatitis C treatment combination JNJ-4178. It expects to wrap up its Phase II trials, but stop the program at that point, not continuing onward. The company indicates that the decision was made because of an overfilled market of effective therapies.

“Going forward, our hepatitis R&D efforts will focus on chronic hepatitis B, where a high unmet medical need still exists,” said Lawrence Blatt, Janssen’s Global Therapeutic Area Head, Infectious Disease Therapeutics, in a statement. “Our scientists are energized by this challenge and our research ambition is to achieve a functional cure of hepatitis B which affects over a quarter of a billion people globally. At Janssen, we focus our research and development on areas of greatest unmet medical need where we can combine our excellent internal science with the best available external innovation to bring optimized solutions and maximum benefit to patients.”

J&J got into the hepatitis C market at a time when it was undergoing major changes, largely led by Gilead Sciences (GILD). Gilead’s drugs for hepatitis C essentially cure the disease, and the other companies that followed in its path primarily differentiated themselves by being cheaper or requiring fewer doses or shortening the timeline of the regimens.

John Carroll, writing for Endpoints News, notes, “That’s a disaster for Achillion (ACHN), which partnered its NS5A drug odalasvir (ACH-3102) with the pharma giant in a $1.1 billion pact. The pharma giant also bought out Alios for $1.75 billion, gaining the nucleotide NS5B inhibitor AL-335, which was added to a portfolio that also included the NS3/4A protease inhibitor Olysio, an approved therapy in-licensed from Medivir (MVRBF).”

Medivir says J&J’s abandonment of the hepatitis C cocktail program won’t change the terms of its licensing agreement with J&J, although Carroll says, “it certainly will have an impact on its potential in this crowded market.”

Medivir may have tried to put a positive spin on it, but investors weren’t in agreement. Medivir AB stock lost 8 percent in trading in Stockholm. Nasdaq indicated, “The company noted that the discontinuation of development f JNJ-4178, the triple combination of semeprevir, odalasvir and AL-335, does not affect the ongoing partnership with Janssen on Olysio (simeprevir), or the existing licensing agreement with Janssen in which semeprevir is included.”

“Although Janssen’s decision not to progress this promising treatment further is unfortunate, Medivir’s focus does not change,” said Christine Lind, Medivir’s chief executive officer, in a statement. “We continue to develop our proprietary pipeline in oncology and look forward to completing the ongoing Phase IIa studies in osteoarthritis.”

In a statement, Milind Deshpande, Achillion’s chief executive officer, said, “While we believe that patients worldwide would benefit from convenient, short-duration therapies like JNJ-4178, we remain fully focused on advancing our factor D portfolio of complement alternative pathway inhibitors in areas where patient needs are greatest, and using our strong balance sheet of almost $370 million in cash and cash equivalents at June 30, 2017 to do so.”